Reason Foundation

What Caused the Budget Mess? California's Spending Has Nearly Tripled Since 1990
Don't blame tax revenues for the deficit, they increased 167 percent

Los Angeles (February 18, 2009) - Facing a massive $42 billion budget deficit, California is laying off thousands of workers and issuing IOUs instead of paying its bills. A new Reason Foundation study examines two decades worth of state budgets and concludes that runaway spending is to blame for this fiscal disaster.

The Reason Foundation study shows that since former Gov. George Deukmejian's final budget in Fiscal Year 1990-91, state spending-including the General Fund, special funds, and bond funds-has skyrocketed 181 percent. Spending nearly tripled from $51.4 billion in FY 1990-91 to $144.5 billion in FY 2008-09.

Are California's taxpayers getting higher quality services than they did in the 90s? They should be. In FY 1990-91 the state spent $1,350 per capita. Today, the government spends $2,644 per person.

"California is swimming in red ink because of its extravagant spending," said Adam Summers, the policy brief's lead author and a policy analyst at Reason Foundation.

Politicians often blame falling revenues for California's budget woes, but state revenues jumped 167 percent between 1990 and 2008. In FY 1990-91, the state took in over $38 billion in General Fund revenues. By FY 2008-09 revenues were $102 billion. If California had simply limited its spending increases to the 4.38 percent average increase in the state's consumer price index and population growth each year since FY 1990-91, the California would be sitting on a $15 billion surplus right now.

The Reason Foundation study calls for spending and revenue limits along with a rainy-day fund to help avoid future budget disasters.

"The California Performance Review showed there are literally thousands of ways to eliminate waste in state government and improve its cost-effectiveness," said George Passantino, senior fellow at Reason Foundation and a former director on Gov. Arnold Schwarzenegger's California Performance Review. "From public-private partnerships to eliminating needless boards and commissions to selling state-owned beach houses and golf courses, the blueprint for meaningful reform exists. Now we need leaders with the willpower to end the state's spending addiction and chart a new, healthy course."

Full Report Online

California Spending by the Numbers: A Historic Look at State Spending from Gov. Pete Wilson to Gov. Arnold Schwarzenegger is online here.

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